The student lettings sector is experiencing significant disruption following implementation of the Renters’ Rights Act, with landlords and agents facing unexpected financial losses this summer.
According to Adam Walker, a business sales broker specialising in the property sector, the legislation has disproportionately affected student lettings compared to other rental sectors. The issue stems from the Act’s provisions allowing students to terminate 12-month contracts that began in September 2025 ahead of their original end dates.
Financial impact on landlords and agents
The early termination clause has resulted in many landlords holding vacant properties during the summer months with no rental income. Walker estimates this void period could eliminate annual profit margins for affected landlords.
Letting agents managing student properties are similarly affected, with no fee income for approximately three months. Given that most letting agents operate on profit margins below 20%, Walker suggests many will record no profit for the current year.
The disruption comes at a time when property professionals across the sector are navigating changing market conditions.
Market adaptations expected
Walker anticipates the sector will adjust to the new regulatory environment through two primary mechanisms. Student tenancy agreements may shift to commence in June rather than September, aligning contract end dates with the academic calendar. Alternatively, rents could increase by approximately 25% to account for expected three-month void periods.
The legislation may also accelerate landlord exits from the student lettings market, with some property owners considering sales or switching to professional tenants. Purpose-built student accommodation (PBSA), which is exempt from the new regulations, is expected to see increased development activity. However, PBSA typically commands higher rents than traditional student housing.
Business valuations affected
Student lettings business valuations have declined in response to the regulatory changes. Walker advises current business owners to delay sales for approximately 12 months to allow market conditions to stabilise, expressing confidence that demand and pricing will recover as agents develop strategies to mitigate the legislation’s impact.
The longer-term effects on the student lettings market remain uncertain as landlords, agents and tenants adjust to the new regulatory framework. The shift in contract timing or rental pricing structures is expected to become clearer ahead of the 2026-2027 academic year.
